Question

BeBe had a tough year! She had two different unfortunate casualties during the year.   First, her car was in an accident. Her car had a value of $20,000. Her basis (her cost) had been $30,000. After the accident, the value was reduced to only $10,000. Her insurance company reimbursed her for $3,000 only. Second, she had a separate free-standing storage she on her property, which burned down.   The shed had a fair market value of $4,000, and a cost adjusted basis to BeBe of $3,500. Her insurance company reimbursed her $3,000 for her loss.   If BeBe's adjusted gross income is $60,000, what is her deductible casualty loss, if any?

Answer 1

Casualty loss for car

First take the lesser of value and basis that is lesser of 10000 and 30000

So it is 10000

Insurance company reimbursed 3000

Per casualty floor - 100

So causalty loss on car = 10000-3000-100=6900

Now causalty loss for shed

First take the lesser of value and basis that is lesser of 4000 and 3500

So it is 3500

Insurance company reimbursed 3000

Per causalty floor = 100

So casualty loss on shed =3500-3000-100=400

Total casualty loss = 7300

Deductible causalty loss = total causalty loss - (10%*AGI) =7300-(10%*60000) =7300-6000 =1300